1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION
2 505 VAN NESS AVENUE, AUDITORIUM
3 SAN FRANCISCO, CALIFORNIA
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8 REPORTER'S TRANSCRIPT
9 SEPTEMBER 10, 2013
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12 CHIEF COUNSEL MATTERS
13 ITEM J RULEMAKING
14 J1 PROPERTY TAX RULE 474, PETROLEUM REFINING
15 PROPERTIES
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27 REPORTED BY: Kathleen Skidgel
28 CSR NO. 9039
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1 P R E S E N T
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3 For the Board Jerome E. Horton
of Equalization: Chairman
4
5 Michelle Steel
Vice-Chairwoman
6
7 Betty T. Yee
Member
8
9 George Runner
Member
10
11 Marcy Jo Mandel
Appearing for John
12 Chiang, State Controller
(per Government Code
13 Section 7.9)
14
Joann Richmond
15 Chief, Board Proceedings
Division
16
17 For Board of
Equalization Staff: Richard Moon
18 Tax Counsel IV
Legal Department
19
Bradley Heller
20 Tax Counsel IV
Legal Department
21
Randy Ferris
22 Chief Legal Counsel
Legal Department
23
24 ---oOo---
25 Speaker: Gina Rodriquez
Vice President of State
26 Tax Policy
CalTax
27
28 ---oOo---
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1 505 VAN NESS AVENUE, AUDITORIUM
2 SAN FRANCISCO, CALIFORNIA
3 SEPTEMBER 10, 2013
4 ---oOo---
5 MS. RICHMOND: Next are Chief Counsel
6 matters. Item J Rulemaking; J1 Property Tax Rule
7 474, Petroleum Refining Properties.
8 And I believe we do have a speaker. One of
9 the speakers that signed in had to leave, but he did
10 leave his written comment.
11 MR. HORTON: Welcome, Mr. Moon. I would
12 ask that you introduce the issue as the speaker
13 comes forward.
14 MR. MOON: Good evening. Richard Moon and
15 Brad Heller for the Legal Department.
16 As a result of a recent Supreme Court
17 decision that invalidated Property Tax Rule 474 for
18 procedural reasons but upheld its substantive
19 validity, staff is requesting your approval to
20 repeal and initiate the rulemaking process to
21 readopt the rule.
22 MR. HORTON: Thank you very much, sir.
23 Ms. Rodriquez, Vice -- Vice President of
24 the State Policy California Taxpayers Association.
25 I was about to call you "President."
26 ---oOo---
27 GINA RODRIQUEZ
28 ---oOo---
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1 MS. RODRIQUEZ: Okay, thank you -- am I on?
2 Thank you, Mr. Chair, Members.
3 MR. HORTON: Yes.
4 MS. RODRIQUEZ: Gina Rodriquez with
5 California Taxpayers Association.
6 Board staff should provide an adequate
7 assessment of Rule 474's economic impact during the
8 rulemaking process; a reasoned estimate of all costs
9 resulting from the rule must be included; evidence
10 from assessors showing that refineries, including
11 fixtures, are sold in the marketplace as a unit must
12 be included.
13 CalTax respectfully requests that the Board
14 direct staff to initiate meetings with interested
15 parties before the rulemaking process begins. An
16 interested parties process will ensure an open,
17 transparent process in developing this very
18 important economic impact report.
19 Let's get it right this time. Let's reduce
20 the State's exposure to another lawsuit and let's
21 create an honest, accurate report. And that's why
22 we request that you initiate the rulemaking process
23 for interested parties.
24 Thank you.
25 MR. HORTON: Thank you very much.
26 Discussion?
27 Member Mandel?
28 MS. MANDEL: Uhm, I'm just looking at, uh,
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1 what we were handed. This is the written comments
2 of the gentleman from L.A. County Assessor who had
3 to leave, right?
4 MS. RICHMOND: Yes.
5 MS. RODRIQUEZ: Yes. Mr. Cooney had to
6 catch his plane.
7 MS. MANDEL: Right. Um, and I'm looking at
8 his last paragraph. He'd like to offer, on behalf
9 of County of L.A., expertise toward crafting an
10 economic impact statement to meet the requirements
11 for passage of Rule 474.
12 I mean, he is urging the Board to, you
13 know, redo the rule, but he's offering his expertise
14 as well.
15 MR. HORTON: I think that's part of the
16 interested parties process.
17 MS. RODRIQUEZ: As are we.
18 MR. RUNNER: That would be part of the
19 interested parties process, right?
20 MS. MANDEL: I just wanted to note that --
21 that.
22 MR. RUNNER: He's willing to participate.
23 MS. MANDEL: He is.
24 MS. RODRIQUEZ: As are we.
25 MR. HORTON: Okay. Uhm, that seems to be
26 the --
27 Member Yee.
28 MS. YEE: I don't have any objection. I
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1 guess I'm just trying to, um -- is the interested
2 parties process the best venue? I mean, we've
3 always welcomed them. But I'm just thinking in
4 terms of, you know, for data and economic analysis
5 it's not ever been the most successful venue for
6 those types of things to happen.
7 MS. MANDEL: Well, here -- here's -- oh,
8 I'm sorry.
9 Here -- here's what my -- I mean the
10 interested parties process wasn't -- I mean that's
11 like a term that we use.
12 MS. YEE: Mm-hmm.
13 MS. MANDEL: But --
14 MR. HORTON: It's actually the rulemaking
15 process.
16 MS. MANDEL: It's -- it's -- but --
17 Otherwise I think what staff would do --
18 again, throw something at me if I'm crazy here -- is
19 that you would just redraft your economic impact
20 statement, um -- if the Board voted to reinitiate,
21 you -- you'd draft the thing and it would be in with
22 the notice for the hearing? Is that how -- where we
23 next see it? Or we don't see it; it just goes to
24 OAL? Help me out a little, Mr. Heller.
25 MR. HELLER: Ms. Mandel, the -- the
26 analysis is included in the initial Statement of
27 Reasons which is made available on the Board's
28 website. And the findings of it and the conclusions
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1 are included in the notice itself.
2 MS. MANDEL: The notice before our public
3 hearing?
4 MR. HELLER: Mm-hmm.
5 MS. MANDEL: Okay. So here's -- here's
6 what I was thinking in terms of -- then when it
7 comes to public hearing, just like we had that last
8 public hearing, if there are people who thought
9 there were problems with the economic impact
10 statement, they're going to come and testify during
11 that hearing and tell us why they think it's wrong.
12 And I guess having that input in advance,
13 to the extent that that seems to be -- I mean, I
14 don't know that it's a full interested parties
15 process and we don't usually have that with an
16 economic impact statement. But since there was some
17 testimony last time, it just seemed a little
18 diff- -- I mean, we might still wind up with
19 testimony at the hearing that there's something not
20 quite right in the economic impact statement.
21 But I guess it just seemed like it was
22 better to have it -- since there seems to be a fuss
23 about it, better to have it vetted before it goes
24 in --
25 MR. RUNNER: Yeah.
26 MS. MANDEL: But it doesn't necessarily
27 have to be a whole interested parties process, it's
28 just --
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1 MR. RUNNER: Yeah, let me -- can I ask
2 about that? I mean, what is -- I mean, I guess what
3 we're talking about -- again, sometimes I get lost
4 in the term of art.
5 MR. HORTON: Mr. Ferris, would you come
6 forward, please?
7 MR. RUNNER: Sometimes I get lost maybe in
8 the term of art when we say "interested parties
9 meeting" in terms of whether that just means, hey,
10 as we're going through this process can't we talk to
11 folks in regards and get their input prior to us
12 coming before the Board with the recommendation,
13 uhm -- and I don't know if that's a formal
14 interested parties process or if that's just smart
15 way to do business -- in order to then -- so that we
16 don't have the testimony in the midst of the first
17 time we hear it here.
18 And it seems to me we both have, uhm -- you
19 know, we have both the -- the taxpayer group
20 interest, or taxpayer interest issue. And it seems
21 to me we have the assessors saying, "Hey, I'd be
22 glad to help be a part of that discussion, too."
23 So I guess that's -- and I don't know how
24 that slows down or -- it certainly doesn't speed it
25 up. But I don't know what impact that is
26 necessarily then on the -- on the rulemaking process
27 that we initiate there.
28 MR. FERRIS: Randy Ferris, Chief Counsel.
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1 Yeah, staff is already in the process of --
2 of getting information, seeking that to update the
3 economic impact statement. And L.A. County is
4 expressing its eagerness to assist with that; I'm
5 sure other assessors will as well.
6 We would also welcome any input from
7 industry that they -- sometimes they don't want to
8 put forward specifics about some of their financial
9 dealings. But to the extent anyone in industry
10 would like to give us information on this, we would
11 welcome that. As well, if the Board would like to
12 formalize that information-gathering process and
13 instruct staff to -- you know, to reach out formally
14 in that way, we would be happy to do so.
15 If you'd like us to -- to link that with an
16 actual meeting where we sit down at a table and talk
17 about the information that we've gathered, that can
18 happen as well. Or that can be part of the public
19 hearing discussion as well.
20 But we're certainly -- however the Board
21 directs, we're certainly planning for and will
22 execute a process whereby everybody is able to
23 provide input to us with respect to revising and
24 making reasonable REIS.
25 MS. YEE: Mm-hmm.
26 MR. HORTON: Um, not to get caught up in
27 the semantics of the term "interested parties," it
28 seems as if, though, we are accomplishing the
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1 objective of having all the interested parties be
2 able to -- to interject in the process.
3 I personally think as much transparency if
4 we can possibly have in this process not only adds
5 to the economic study but also gives the public an
6 opportunity to understand the process what we go
7 through.
8 So, therefore, just continue to do what
9 you're doing in soliciting input and providing a way
10 in which the public can provide input. And at the
11 same time, when it's brought forth, the public will
12 have another opportunity at the hearing to, again,
13 share their thoughts as it relates to the conclusive
14 recommendation of staff.
15 Uhm, does that work?
16 MR. RUNNER: Yeah. I -- I -- I think I
17 would tend to say, you know, a little -- well, I
18 hesitate to use the word "formal" as much as I am --
19 you know, face-to-face discussions as opposed to,
20 "Hey, give us a call and tell us what you think"
21 kind of discussions.
22 So I think -- I think a good meeting
23 together is always a good thing to get -- you know,
24 help get input.
25 MR. FERRIS: Yeah. And I mean we are
26 really desirous of things in writing --
27 MR. RUNNER: Absolutely. Right.
28 MR. FERRIS: -- with very specific
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1 information --
2 MR. RUNNER: Absolutely.
3 MR. FERRIS: -- about assessment issues.
4 MR. RUNNER: Yeah.
5 MR. HORTON: Okay. So Member --
6 MR. RUNNER: I think they got the gist.
7 MS. YEE: Okay.
8 MR. FERRIS: You could -- you could leave
9 it to staff's discretion --
10 MS. YEE: Mm-hmm.
11 MR. FERRIS: -- as to whether or not a
12 actual sit-in-a-room meeting is necessary. But we
13 will formalize the process of requesting information
14 from interested parties and --
15 MR. HORTON: Okay.
16 MR. FERRIS: -- and the assessors.
17 MR. RUNNER: Okay.
18 MS. YEE: Okay.
19 MR. HORTON: Member Ru- -- Member Yee moves
20 to adopt staff recommendation to repeal and to
21 readopt Rule seven four -- 474, uhm, with the
22 caveats and understandings put forth by our Chief
23 Legal Counsel as well as the Members of the Board.
24 Without objection, Members, such will be
25 the order.
26 ---oOo---
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1 REPORTER'S CERTIFICATE
2
3 State of California )
4 ) ss
5 County of Sacramento )
6
7 I, KATHLEEN SKIDGEL, Hearing Reporter for
8 the California State Board of Equalization certify
9 that on September 10, 2013 I recorded verbatim, in
10 shorthand, to the best of my ability, the
11 proceedings in the above-entitled hearing; that I
12 transcribed the shorthand writing into typewriting;
13 and that the preceding pages 1 through 11 constitute
14 a complete and accurate transcription of the
15 shorthand writing.
16
17 Dated: September 20, 2013
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19
20 ____________________________
21 KATHLEEN SKIDGEL, CSR #9039
22 Hearing Reporter
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